Investor guide

Buying a short-term rental
near the water.

River and lake tourism makes this one of the more active short-term rental markets in Texas. It is also one of the more regulated, and the rules differ street by street. Verify before you buy, never after.

Three layers of rules, all of which can stop you

1. City or county. New Braunfels regulates short-term rentals, including permitting and where they are allowed by zoning. Unincorporated Comal County near Canyon Lake works differently. Confirm the current ordinance for the exact address with the city or county directly.
2. Deed restrictions and the HOA. Plenty of subdivisions prohibit rentals under a minimum term regardless of what the city allows. This is the one that catches buyers most often.
3. Your lender and insurance. A second-home loan may require personal use and restrict renting. A standard homeowners policy generally will not cover commercial rental use; you need a short-term rental policy.

Run the numbers honestly

• Seasonality is extreme here. Summer on the river is not the rest of the year. Underwrite on annual revenue, not a July weekend.
• Costs add up: management or cleaning, platform fees, utilities, higher insurance, furnishings, repairs from heavy turnover, and hotel occupancy taxes, which are collected and remitted at both state and local levels.
• Property taxes change. A non-homestead property does not get a homestead exemption or the cap on appraised increases.

Buy for the location, not the pro forma

Walkability to the river, Gruene or the lake drives bookings more than finishes do. A great nightly rate on a property nobody can walk anywhere from is a harder business. And the best protection against a rule change is a property that also works as a long-term rental or a second home.

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This article is general information, not legal, tax, financial or insurance advice. Rules, rates and local ordinances change — confirm the details with your lender, insurance agent, title company, city or county, or a qualified professional.